Euro zone June inflation unchanged at low levels as expected

Reuters Staff

3 Min Read

* Prices grow 0.1 pct m/m, 0.5 pct y/y in June
* Prices fall in Greece, Portugal and Slovakia
* For TABLE pls see
By Martin Santa
BRUSSELS, July 17 (Reuters) - Euro zone inflation stayed low
as expected in what the European Central Bank calls the "danger
zone" in June as falling prices of food and phone calls offset
more expensive tobacco and restaurants, data showed on Thursday.
Consumer prices in the 18 countries using the euro rose 0.1
percent on the month in June for a 0.5 percent year-on-year gain
-- the same annual inflation rate as in May, data from the
European Union's statistics office Eurostat showed.
The annual rate is well below the ECB's inflation target of
close to, but below 2 percent. The central bank believes that
price growth slower than 1 percent is a "danger zone" because of
the risk of deflation. Price growth has been below 1 percent
since last in October.
The ECB left interest rates unchanged in July, a month after
cutting them to record lows and pushing the deposit rate into
negative territory and it made clear it was ready to print money
in the future if needed to prevent deflation.
Consumer prices fell in Greece, Portugal and Slovakia in
June and 5 countries had inflation at or above 1 percent,
including Germany where prices rose 1.0 percent on the year.
Core annual inflation - which excludes the volatile prices
of energy and unprocessed food - stood at 0.8 percent in June,
unchanged from May.
The ECB is also keeping an eye on the euro exchange rate and
its impact on inflation -- the bank is ready to launch
additional measures to prevent deflation if the euro becomes to
strong.
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For graphics pls see:
* Euro zone inflation rates by country: link.reuters.com/vex45v
* ECB rates and inflation: link.reuters.com/juw29s
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(Reporting by Martin Santa)